The Accountant for a New Company Is Establishing the Chart

question 140

Multiple Choice

The accountant for a new company is establishing the chart of accounts for the company based on the accounts she expects to be used. She has decided to use a three digit account number with each account type starting with a different number. Which of the following numbers would you expect the Equity range to begin with?

• A)900
• B)700
• C)300
• D)200
• E)100

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Definitions:

Economic Expansion

A phase of the business cycle where the economy grows and increases in activity, marked by rising GDP, employment, and income.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that includes all expenses except interest and income tax expenses.

Unlevered Firm

A company that operates without any debt financing, relying solely on equity for its financing needs.

Levered

Pertaining to the use of borrowed capital or debt to increase the potential return of an investment.